Q: Suppose that there are two simultaneous events. First, the European Central Bank raises its policy rate which leads to increases in real returns to assets in Europe. Second, U.S. real GDP (income) rises significantly. Then U.S. dollar(Q1 fill in the blank) relative to the euro and U.S. net exports (Q2 fill in the blank).

(option choices the same for both fill in the blanks)

(a) appreciates,

b) depreciates,

c) increase

d) decrease

e)appreciates if the effects of the 1st event are larger.

f)depreciates if the effects of the 1st event are larger.

g) increase if the effects of the 1st event are larger.

h) decrease if the effects of the 1st event are larger.